Globalization is not in retreat (by Susan Lund, Laura Tyson)

16 April 2018

Edge of Change (Issue 010)In this extensive essay, Susan Lund and Laura Tyson try to refute the now-popular thesis that the age of globalization is over, and instead suggest it has taken a new form, strikingly different from the “classic” one. Among the major features characterizing it, the authors emphasize the shift of trade growth from the developed to the developing world (particularly, Asia), saturation of the previous sources of globalization (cheap labour costs in the Third World and more accessible transportation) and growing significance of digital technologies. For example, China is now making unprecedented amounts of investment into artificial intelligence, wishing to become the global leader in it. New globalization brings about quite unexpected effects, too, for example, the small and medium enterprises, thanks to online trade platforms, grow in relevance and have been increasingly internationalizing. However, the process is bound to produce some destruction, too, which hurts both low-skilled workers in the rich countries and the less-developed ones alike. Hence, increasing international cooperation in terms of legislative and technological regulation is a condition necessary for making this new wave of globalization work for the common benefit.

 

China and India are trying to get along better

26 April 2018

The piece at Economist analyzes the relationship between China and Pakistan over the years and indicates that the informal summit to be organized soon, can hardly be ground-breaking for stabilizing the relationship since the both parties tend to compete rather than cooperate. The tense relations between India and Pakistan cost both sides a lot, considering China’s backing up Pakistan, India’s closing its roads for the China-West route, and China’s aid and trade with Nepal, Maldives, Bangladesh and Sri Lanka. In this regard, the Economist argues that none of the parties got to benefit from the escalation of friction between the countries. However, during the summit, many issues should be discussed such as China’s blocking of Indian membership in the Nuclear Suppliers Group, its trade surplus with India, as well as Chinese refusal to recognize Pakistan-based Islamist fugitives as terrorists. 

 

Foreign Policy Failure: America Has Not Learned from Its Wars (by Daniel L. Davis)

28 April 2018

Daniel L. Davis argues that the American government has done a lot of harm to its global influence and image by failing to define clear limits for using its military might as a policy tool. After the end of the Cold War, a dangerous trend to overestimate the U.S. capabilities emerged and resulted in a range of bad foreign policy decisions. What is more threatening, American policymakers haven’t realized the full scale of the problem even by now, the evidence being the protracted deployment of heavy forces in Syria and recent moves suggesting a possible interference into the Yemeni war. The author refers to his experience in Afghanistan, claiming that there is a dangerous culture to mask the real failures on the ground and inventing various excuses for establishing or prolonging military presence.

 

Trump-Goes-to-Korea is the New Nixon-Goes-to-China (by Lawrence Freedman)

30 April 2018

Edge of Change (Issue 010)On the pages of Foreign Policy, Lawrence Freedman makes a point that Donald Trump’s steps in the Korean issue are very similar to the ones Richard Nixon’s did towards China, however, this policy does not guarantee the success. The author argues that President Trump should not get all of the credits for the Korean peace process for several reasons, most importantly since the initiative was taken by the Korean leaders themselves and throughout the process, they did not require guidance. Mr. Freedman states that there is a gap between what Trump wants and what North Korea offers which can be troublesome in next steps. However, he also admits that Trump created an impetus for the talks. But the most arduous test for the Korean pacification policy will pertain in the Mr. Kim’s willingness to make an offer that could be realistically accepted in Washington. Quite probably, the choice will be between Trump’s accepting the promises which will give him very little, or spoiling the Korean initiative in order not to concede American interests.

 

The flaws of finance

1 May 2018

The Economist’s columnist discusses the role and privileges of the financial sector in the contemprary world, arguing that there is a huge discrepancy between them in favor of the latter. The neo-liberal policies brought unprecedented power and influence to the finance, which is all too easy to abuse at the cost of the wider society. Moreover, the drive to maximize profits induces many banks to take risks they cannot even properly estimate themselves, and in some cases may be unaware of their existence- but the dominant culture is still inclined to view the bankers as an elite race of super-smart, hard-working individuals. Taking into account the wealth it commands, the finance sector acquires abnormal political power; in fact, many of the multi-billion crisis measures taken in the aftermath of the global recession  predominantly benefited them, either deliberately or not.

 

The Real Villain Behind Our New Gilded Age (by Eric Posner, Glen Weyl)

1 May 2018

Edge of Change (Issue 010)Prominent American lawyers Glen Weyl and Eric Posner argue that the rise of economic inequality currenltly observed in the West, is due to the large firms acquiring de-facto monopolistic powers. They claim the neo-liberal theory has failed to grasp that in the conditions of loose regulation, giants of capitalism are more likely to exert increasing control over prices and wages rather than sticking to the rules of free market- in fact, it was Adam Smith himself who first discovered it makes perfect sense in terms of maximizing profits. The authors indicate that the traditional anti-trust legislation is not enough to cover the modern risks, and propose new rules that would limit corporate players from controlling a significant share of any particular industry, break up the biggest ones (such as Walmart) and particularly tighten regulatory constraints for the firms in the tech sector (such as Google or Amazon) and institutional investors. 

 

Netanyahu’s ‘Iran Lied’ Presentation Shows Why Trump Should Keep the Nuke Deal (by Ilan Goldenberg)

2 May 2018

Edge of Change (Issue 010)Ilan Goldenberg takes a critical stance towards the recent outburst of indignation by the Israeli PM Netanyahu over the alleged proofs that Iran has fully approached a nuclear weapon capability. He argues that calls to leave the 2015 JCPOA treaty with Iran that eased sanctions against this country, are counter-productive, since it stipulates the full procedure necessary to estimate any claims of its violation, including the international access to all the Iranian nuclear facilities, and re-introduce the full sanction package, if necessary. Moreover, Netanyahu’s reputation, and his choice of time for making so grave condemnations, raise a lot of questions: why couldn’t he have introduced the materials he got to the European partners before loud public statements? This move was contrary to what Israel used to do in such cases- and that’s why it should be treated with an extreme caution.

 

The complicated cocktail of the “Italian anomaly” (by Marie Charrel)

2 May 2018

Edge of Change (Issue 010)The prime cause of concern in the European Union is Italy, with its mounting debt and stagnant growth. Recently, the country has been overtaken in terms of its GDP per capita by Spain, and this news spurred the debate on the reasons of Italy’s plight. The authors bring about the following reasons: the growing historical gap between the North and the South, and the lack of internal economic dynamism that follows from it; rigid institutions that have not been able to effectively adapt to the demands of globalisation and create conditions conducive for innovation and technological progress; deep bureaucratisation and weak educational performance, among the many. The most alarming symptom of this malaise is Italy’s whopping public debt, which has reached 132% of the country’s GDP. European policymakers worry that this debt may one day incite the next big European crisis which, taking into account Italy’s weight in the EU economy, could well put the existence of euro to an end. Politically, the economic failures have already turned millions of Italians Eurosceptic, and the popularity of the European currency is at the record lows.